Tag Archives: mortgage

The real estate market has been struggling for a while for a variety of reasons, leading to plummeting home values and a lot of empty properties. There’s growing belief that rising rental prices will lead to an upsurge in homebuying; however, numerous Americans are struggling to get a mortgage, because they cannot meet the modern demands of picky lenders. If you’re planning to apply for a home loan, be aware of the following:

Times Have Changed

Before the real estate crisis, banks gave loans to almost anyone. These days, that’s not the case. To get a mortgage in today’s market, you will need to meet some strict requirements. This means you will probably need to have a very good credit score, a solid job and enough money to put toward a hefty down payment. Most importantly, you must prove that you can afford the loan, or you will have no chance for approval.

Some Important Tips

Often, when prospective buyers approach a lender, they have no idea what they are getting into. Before you do anything, it’s important to get a free copy of your credit report to check for inaccuracies. If you find any, get them corrected. You should also use a mortgage calculator to figure out what you can actually afford. This will help ensure that you aren’t declined for applying for a loan that’s out of your reach.

Once you get involved with the loan process, don’t do anything that could hurt your chances. Don’t apply for any form of new credit; this can throw off your debt-to-income ratio and make you look bad in the eyes of lenders. Also, don’t change jobs, even if the new opportunity pays more. Banks want a long, stable history of employment and shiver at the thought of instability.

Finally, if you are struggling to get a mortgage, check out local and federal first time buyer programs. Their requirements are far more lenient than those imposed by private lenders. Many also offer second mortgages which can be used to pay for down payments and closing costs.

According to Freddie Mac’s latest survey, 30-year mortgage rates remain near record lows, while 15-year rates linger .74 points lower than what they were this time last year. Low mortgage rates have combined with rock-bottom home prices to create ideal buying conditions; however, most buyers have remained on the sidelines.

Why Few Are Buying

Currently, average 30-year mortgage rates flounder at around 3.66 percent, while 15-year rates average about 2.95 percent. Usually, low rates encourage buyer activity; this hasn’t been the case for the past several years.

“People just aren’t buying for a variety of reasons,” said business and financial expert, Nathaniel Hutchinson. “A lot of people are afraid to buy, because they don’t want to take on new debt. More often than not, though, prospective buyers just can’t get approved for a loan.”

In response to the foreclosure crisis, most lenders tightened their requirements for loan approval. These days, applicants must live up to some pretty lofty standards to qualify for a mortgage.

“Banks want people who have very good credit scores, a strong job history and a good chunk of money to put toward downpayments,” Hutchinson said. “If you don’t have all three of these characteristics, lenders will perceive you as somewhat of a risky investment, and you’re liable to be declined.”

You Can Still Get a Loan

According to Hutchinson, even if you don’t live up to modern lending requirements, you can still get approved for a mortgage.

“In many cases, if you are struggling to get a mortgage, you can get approved by a local first time buyer program,” he said. “These programs tend to have much more lenient standards when it comes to credit scores and downpayment requirements. Additionally, some will even let you take out a second mortgage, which can be used to contribute toward your downpayment and closing costs. Usually, you only need to invest around $1,000 of your own cash to get approved.”

Freddie Mac recently released its latest survey, and the news was good for prospective buyers. Record low mortgage rates have combined with descending home values to create a buyer’s paradise. Unfortunately, many borrowers are having trouble securing loans. Before you buy a home, consider the following real estate tips.

Why it’s So Hard Nowadays

Just a few years ago, banks were passing loans out to all-comers; however, that all changed when the foreclosure crisis hit. Now lenders have implemented very tough requirements that make it hard to get approval. These standards are centered on three big factors: your credit rating, your job and your cash flow. Before you buy a home, learn how to keep from hurting your chances.

Your Credit Report

Get the latest copy of your credit report to ensure that everything is accurate. Even a few minor errors could keep you from securing a mortgage. If something is amiss, file a written or online report to get it corrected.

Your Job

Lenders value economic stability above all else. If a new job opportunity becomes available, you’d be best served to stay put at least until you are able to close on your home. Job security is an important part of the borrowing process. Even if the new job pays more, the lender is likely to view the move as risky.

Your Cash Flow

Before the economic downturn, you could get a mortgage without much of a down payment. That has changed. Nowadays you will be asked to put up roughly 20 percent of the home’s worth. If you have this kind of money, you’re in good shape. If not, you may have to make other arrangements. Before you buy a home, look into local home buying programs. Not only do many of these require much lower credit scores and offer lower mortgage rates; they often allow borrowers to take out smaller, second mortgages which can be used to fund down payment and closing costs.

Freddie Mac’s most recent survey reports that mortgage rates continue to remain at record lows, allowing qualified buyers the perfect chance to snag affordable loans on very nice properties throughout the country.

Unfortunately, many prospective borrowers are still getting denied, thanks to strict lending standards that turn a cold shoulder toward all but the least risky of applicants. That said, low mortgage rates have proved incredibly valuable to existing homeowners who are interested in getting new mortgages that will either lower their monthly payments or allow them to pay off their home at a faster pace.

Big Upside for Some

Mortgage refinance is a lifesaver for many homeowners, who can’t afford the large monthly payments that come with 15-year plans. Thanks to low current rates, switching over to a 30-year plan can mean much smaller monthly mortgage bills.

This strategy has also been a wise choice for financially stable homeowners, who are focused on eliminating their mortgages faster while avoiding costly interest fees. By switching from a 30-year mortgage to a 15-year plan, they are able to side-step interest charges and buy their homes for less. This is especially helpful for seniors who don’t want to be saddled with a home loan after they retire. It’s also a nice option for people who have experienced financial growth in the years since they initially purchased their home, when they existed on a much tighter budget.

Some Unable to Qualify

To qualify for mortgage refinance, homeowners usually need at least some property equity. Unfortunately, a new report from Zillow suggests that up to one-third of all homeowners remain underwater, thanks to declining home values.

That said, if you are in a good position to refinance your mortgage, experts agree now is the time to do it. Just be sure to consider any expenses you might incur, such as closing costs and fees, which can detract from whatever savings you may enjoy.

According to Freddie Mac, current mortgage rates are at record lows; however, that doesn’t necessarily mean you will end up with an affordable home loan. Before you contact a lender, get the facts from our in-house financial expert, who warns that national averages often have little effect on what borrowers should expect in their particular areas.

Amazingly Low Rates

In its most recent survey, Freddie Mac reported the national average of current 30-year mortgage rates at 3.79, with 15-year loans averaging 3.04 percent. The low averages make now a great time to secure an affordable loan as long as you live in the right area, according to financial expert, Nathaniel Hutchinson.

“In many parts of the country, home loans have never been more affordable,” he said. “If you have good credit, stable employment and enough money to put toward a hefty down payment; you have a great chance to secure a very inexpensive loan.”

Not Everyone Will Get Low Rates

Although Freddie Mac reports that current mortgage rates continue to linger well below 4 percent, Hutchinson says not all borrowers will get a great deal.

“To reach its figures, Freddie Mac surveys only a handful of lenders in different parts of the country,” he said. “Basically, these lenders provide what are called good faith estimates. Usually these estimates are pretty accurate; however, just because rates are low in one area doesn’t mean they will be low elsewhere.”

Hutchinson says lenders base their rates on perceived risk, which can vary from state to state and town to town.

“If you are applying for a loan in an area that has experienced significant unemployment and/or foreclosures, your rates are liable to be higher,” he said. Likewise, if you have dings to your credit or have any other personal financial issues that might make a lender nervous, the institution will assess a higher rate to protect itself against a potential default.”

What Borrowers Should Do

According to Hutchinson, borrowers should always compare offers before settling on any one particular mortgage lender.

“You might think that all banks assess risk using similar formulas; and for the most part, this is true,” he said. “That said, many have differing policies that can result in higher rates, fees and other expenses. To get the best deal, borrowers should always speak to multiple lenders.”

In its most recent survey, the federal mortgage giant known as Freddie Mac reported average 30-year mortgage rates at record lows, continuing a trend that has kept home loans more affordable than they’ve been in decades. Unfortunately, few Americans have been able to secure new mortgages, thanks to tougher lending restrictions that have made it difficult for some prospective buyers to earn approval.

Rates Continue to Plunge

According to Frank Nothaft, VP of Freddie Mac, 30-year mortgage rates averaged 3.83 percent during the first part of May and have rested under 4 percent for all but one week since December. Affordable rates have combined with descending home prices to generate a veritable buyer’s paradise throughout much of the country; however, sales have remained stagnant, thanks to strict lending requirements.

These days, banks will only provide loans to borrowers who meet specific standards. Both the federal government and National Association of Realtors have tried to convince lenders to loosen their restrictions; unfortunately, the so-called freeze-out has continued. If you have a good job, good credit and enough loose cash to put toward a hefty down payment; you can get a very nice home at an amazing price. That said, if you don’t have all three, you aren’t likely to get approved for a mortgage.

Who is Taking Advantage

Although buyers are struggling to take advantage of low mortgage rates, many existing homeowners are having a field day. Mortgage refinance is more popular than ever, with many homeowners saving a bundle by switching their 30-year loans to 15-year plans and vice versa.

According to Freddie Mac, 15-year mortgage rates averaged 3.05 percent during the first part of May, down .75 percent from the same time in 2011. If you are doing well financially, you can save a bundle on interest fees by switching from a 30-year mortgage to a 15-year plan. On the other hand, if you already have a 15-year loan, you can lessen your monthly payments by switching over to a 30-year plan.

Low rates have made mortgage refinance a smart move; however, before getting a new mortgage, it’s important to find out how much you will have to pay in closing costs and other fees. After all, these expenses can take a big chunk out of whatever savings you might enjoy by refinancing to a cheaper home loan.